Tax Advantages for Australians Planning to Move Abroad

For many Australians, the decision to move overseas is driven by career opportunities, lifestyle goals, or the appeal of experiencing life in a different part of the world. But beyond the personal motivations, there is a financial dimension that is often underappreciated in the planning stages. The tax advantages for Australians planning to move abroad can be significant, and for those who structure their affairs correctly, the financial benefits can last well beyond the initial transition.

This blog explores the key tax advantages for Australians planning to move abroad and what the 2026-27 Australian Federal Budget means for those considering a move overseas.

Understanding Australian Tax Residency

Before exploring the tax advantages for Australians planning to move abroad, it is important to understand how Australian tax residency works.

Australia taxes its residents on their worldwide income. Non-residents, on the other hand, are generally only taxed on Australian-sourced income. Whether you cease to be an Australian tax resident when you move abroad is not always straightforward, and the determination is based on a series of residency tests. Getting this right from the outset is critical.

Key Tax Advantages for Australians Planning to Move Abroad

(1) Lower Tax Rates on Foreign Income

One of the most immediate tax advantages for Australians planning to move abroad is the potential to earn income in a lower-tax jurisdiction. Many popular expat destinations have income tax rates well below Australia's top marginal rate of 47% (including the Medicare Levy). In the UAE and Bahrain, there is no personal income tax at all, while Singapore's top marginal rate is 24%. Once you cease to be an Australian tax resident, your foreign employment income is generally not assessable in Australia.

(2) No Capital Gains Tax on Non-Taxable Australian Property

As a non-resident, Australian CGT generally only applies to assets classified as "taxable Australian property," such as Australian real estate. Shares, ETFs and managed funds are typically classified as non-taxable Australian property for non-residents, meaning gains on those assets are generally outside the Australian CGT net while you are living overseas.

(3) Pre-Departure Capital Gains Tax Planning

The period before you depart Australia is one of the most valuable planning windows available. When you cease to be an Australian tax resident, you are treated as having disposed of most non-taxable Australian property assets at their market value on the date of departure. This is known as a deemed disposal.

While a deemed disposal can trigger a CGT liability where assets have increased in value, it also resets the cost base of those assets to market value. This means that future growth occurring while you are a non-resident will not be subject to Australian CGT when those assets are eventually sold. For assets expected to continue growing significantly, this reset can be a meaningful long-term advantage.

There is also a separate opportunity to consider realising gains on appreciated assets before departure while still entitled to the 50% CGT discount as a resident, rather than allowing those gains to accrue during a period of non-residency when the discount may not apply in full. Reviewing your investment portfolio carefully before departure, and understanding which assets to hold, sell, or restructure, is one of the most impactful tax advantages for Australians planning to move abroad.

(4) Superannuation Continues to Grow Tax-Effectively

Your superannuation fund continues to operate while you live overseas. Earnings within the fund are taxed at just 15% in accumulation phase, significantly lower than the marginal rates that may apply to equivalent investments held outside of superannuation.

Key considerations for Expats include:

• Whether to continue making voluntary contributions while overseas;

• How the fund is invested relative to your long-term retirement goals;

• How your balance interacts with the additional tax on superannuation balances above $3 million, now in effect from 1 July 2026.

(5) Double Tax Agreements

Australia has double tax agreements (DTAs) with more than 40 countries, designed to prevent income from being taxed twice. Depending on the DTA in place, certain income types such as dividends, interest, and pension payments may be taxed primarily in one country, with a credit or exemption available in the other. Understanding the DTA relevant to your destination is an important part of pre-departure planning.

What the 2026-27 Federal Budget Means for Australians Planning to Move Abroad

The 2026-27 Australian Federal Budget, handed down on 12 May 2026, introduces several proposed reforms relevant to those in the pre-departure planning phase. These proposals remain subject to future legislation, but the direction of reform is worth understanding now.

Key proposed changes include:

• 50% CGT discount replaced from 1 July 2027: The current 50% CGT discount for individuals is proposed to be replaced with an inflation-indexation model, with a 30% minimum tax applying to net capital gains.

• Negative gearing limited from 1 July 2027: Losses on newly acquired established investment properties would only be deductible against future rental income or capital gains from property, rather than against other income. Existing properties and contracts entered before Budget night on 12 May 2026 are expected to be grandfathered.

• Discretionary trust minimum tax from 1 July 2028: A minimum 30% tax rate is proposed on the taxable income of discretionary trusts. Australians with trust structures should review their arrangements before departure and ahead of that date.

• No changes to tax residency rules: The existing framework under the residency tests and Tax Ruling TR 2023/01 remains in place, providing certainty around how non-resident status is determined.

Conclusion

The tax advantages for Australians planning to move abroad are real and meaningful, but they rarely arise automatically. The 2026-27 Federal Budget adds further urgency to pre-departure planning, particularly around the 50% CGT discount and existing investment structures. Understanding the tax advantages for Australians planning to move abroad, and acting on them at the right time, is one of the most valuable steps any prospective Expat can take.

Runway Wealth Management is the trusted Financial Adviser to the Australian Expat community. Our tailored advice is backed by expertise, education and experience, which allows us to be at the forefront of Australian Expat Financial Planning.

If you would like to speak to one of our Expat Financial Advisers about this blog or if you have other queries, we would be more than happy to speak with you. Feel free to send us an enquiry through the 'Contact Us' tab provided in the link below:

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General Advice Disclaimer: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.